General Motors has formally confirmed it will add a high-mileage diesel to its Chevrolet Cruze line starting with the 2013 model-year.

The long-rumored diesel is likely to be an adaptation of the 2.0-liter VCDi direct-injection “oil-burner” already offered in Europe on their version of the Chevy compact. Insiders report that the diesel could deliver as much as 51 miles per gallon – significantly more than the current Cruze Eco and in line with the Toyota Prius Hybrid.

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For its part, GM won’t do more than confirm plans to add the diesel, but that is a distinct reversal of the company’s long-standing opposition to the technology. Former GM car czar Bob Lutz, in particular, had argued that the cost of meeting U.S. emissions standards was too high.

A new, more rugged look for the 2011 remake of the Mercedes-Benz R-Class.

What is it about American drivers? They’ll pay a premium and sacrifice some everyday functionality to get an SUV that looks rugged but likely never sees an off-road trail. Offer them a wagon, minivan or anything that looks more like a people mover and they go running.

That seems to have been the curse that kept the old Mercedes-Benz R-Class bound to the bottom of the U.S. sales charts. It was a lavish and well-appointed vehicle that seemed to have a hard time finding a distinct niche and so was largely written off by American motorists – even though it received generally favorable reviews from both the media and those few buyers who actually drove one home.

So, the German maker is giving it one more try, and with the 2011 remake of the Mercedes-Benz R-Class, it’s not making the same mistake. For one thing, you likely won’t hear the maker’s marketing folk refer to the new model as a “Grand Sport Tourer,” whatever that means, anymore.

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Even more luxurious — and functional — than before, the critical update for the new model-year focuses on front and rear-end styling, giving the roomy people carrier a bit more of a crossover-ute look that should enhance its appeal.

While Mercedes-Benz is just ready to launch its first hybrid, the ML450, it remains committed to diesels, says U.S. CEO Ernst Lieb.

If he didn’t hand you his business card, you might not guess where Ernst Lieb hails from. He’s got an easy-going manner and quick laugh, not the stiff formality Americans typically associate with German executives. His accent is slight and his knowledge of the North American market – and its culture – runs deep. It helps, of course, that he’s spent plenty of time here, running first the Canadian, and now the U.S., subsidiaries of luxury powerhouse Mercedes-Benz.

The automaker once assumed an almost god-given right to dominate the luxury market, both in the U.S. and globally, but it’s had a tougher battle in recent times. The American debut of Japanese marque Lexus was one body blow, and German marques BMW and Audi haven’t made things easy, either, lately. To top that off, the current recession has been unexpectedly hard on the entire luxury market, with Mercedes sales, some months falling nearly as fast as troubled General Motors.

Even so, the German maker continues to roll out a procession of new products, such as the E-Class remake due to showrooms in the coming months. TheDetroitBureau.com’s Paul A. Eisenstein spoke with Lieb about Wonder Diesels, certified used cars, new competitors and more.

TheDetroitBureau: Mercedes is about to introduce its first hybrid vehicle, in the U.S., a version of the M-Class sport-ute dubbed the ML450. How important will hybrids be for you?

Lieb: When you look at last, with record fuel prices, there was a lot of talk about hybrids. That’s changed since fuel prices came back down. I expect fuel prices will go back up again, not stay at $50 a barrel, so this is still the right thing to do. I don’t think sales will be huge. It’s for customers who want hybrid technology. Of course, there obviously will be a price difference you have to pay for the technology.

TDB: You also remain committed to diesels, and at the recent New York Auto Show, you provided a look at a version of the new E-Class sedan, the E250, that could be outfitted with what the European press have dubbed the “Wonder Diesel,” a 2.5-liter engine that you said could go over 40 mpg, even in that big car. When do we get it here?

Lieb: We’d love to see that engine here. To get over 40 mpg is huge, but we’d love to see it, at least first, in the C-Class or maybe the new GLK, not the E-Class. We’re just not sure customers would accept it there. (more…)